Published: 09:13 GMT, 9 May 2013 | Updated: 08:07 GMT, 31 May 2013

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With savings rates at an all-time low, it has become even more important to think outside the box to make your nest egg work as hard as possible.

Depressingly, Virgin Money’s cash Isa is now the only account to actually beat inflation. And to get its 3 per cent rate you need to sign up for five years.

Adrian Lowcock, of Hargreaves Lansdown, points out: ‘Cash will always play an important role in managing your finances, but with rates so low it no longer protects investors from the ravaging effects of inflation.

‘At the current rate of 2.8 per cent inflation will halve the value of cash in just over 25 years. To beat the eroding effects of inflation, investors can diversify into other assets such as bonds and equities which provide a more attractive yield — although with more risks.’

So what can those willing to take a bit more risk do? Below, Lowcock gives his three top tips for investors to beat inflation.

Savings drought: Just one account now beats inflation, so what can savers do instead?

1. Corporate bond funds

The suggestion of a great rotation may be a bit premature as strategic bond funds were the best-selling sector in April this year.  While the interest yields on bonds have fallen in recent years the asset class will continue to be attractive to investors while cash rates remain low and do not even beat inflation.

Strategic bond funds offer investors access to the whole market and allow managers the greatest flexibility to identify opportunities and maximise both income and growth.

Fund idea: Jupiter Strategic Bond — with an historic yield of 5.4 per cent the fund offers an income comfortably above inflation.

Manager Ariel Bezalel is currently invested in higher risk high-yielding corporate bonds, which make up a large portion of the fund, although he aims to offset some of this risk by investing in more defensive sectors, such as the food industry.

2. UK Equity Income

Over the longer term, equities tend to outperform other asset classes, however, they can be more volatile.

A long-term strategy which will reward patient investors and help those looking for alternative income streams is equity income. Fund managers who invest in this sector are looking for companies which are able to pay a good and rising dividend.

This often demonstrates a strong financial wellbeing because dividends are paid out of earnings.  Managers often sell out of a company when the valuation rises too far.

Fund idea:   JO Hambro UK Equity Income has a yield of 4.2 per cent.

The managers, Clive Beagles and James Lowen, have added exposure to more defensive areas of the market; though they remain highly selective given the popularity of defensive sectors in recent years.

They favour areas where they believe the attention of investors is much lower, such as bus and rail, and telecommunications firms. They continue to focus on companies with sound balance sheets and low levels of debt.

3. Global Equity Income

As the world adapts to the post financial crisis era, equity income has become of increasing interest to investors in other countries.

The certainty provided by companies which are well managed, have a good cash flow and clear visibility of future earnings, which enable them to payout a dividend and grow that dividend each year, is highly valued in the current climate.

For investors looking to improve the income earned from their savings, global equity income offers further diversification to help reduce the risks involved.

Fund idea:   Newton Global Higher Income has a yield of 3.98 per cent.

Manager James Harries identifies themes set to shape the investment landscape such as emerging market growth, energy supply and the provision of healthcare.

He uses this to identify companies well placed to benefit. As well as seeking dividend stalwarts across the US, UK and Europe, he is currently finding opportunities among up-and-coming businesses in higher risk emerging markets, where there is potential for strong dividend growth over the long term.

He also invests in higher risk smaller companies.